Introduction Wine production world wide has been growing rapidly and had been estimated

to reach 28,200 million litres by 2005 (Rabobank, 2004), still 8,400 million litres more than
consumption. That growth has been fuelled by significant New World plantings including
those in New Zealand, but New Zealand’s wine production is only about one per cent of
world production. In 2005, the 500th winery was established in New Zealand and exports
exceeded 50 million litres for the first time (New Zealand Wine, 2006a). New Zealand wine
producers were entering an increasingly competitive market. New Zealand has been a small
player in the world market, but a relatively successful one (Rabobank, 2004). The landed
bottle price in the United Kingdom for New Zealand wine has been some 36 per cent higher
than the second placed Australia (£5.61 compared to £4.13 for Australia, £3.69 for France,
£3.52 for Spain and £3.16 for Italy (USDA, 2003, cited in Rabobank, 2004)). New Zealand
wine exports are increasing rapidly and projected to continue increasing. The main grape
variety which has established New Zealand wine on the world map is Sauvignon Blanc,
particularly from Marlborough, at the northern end of New Zealand’s South Island. In 2005/6
it accounted for 72 per cent of New Zealand’s exported wine (New Zealand Wine, 2006b). In
this situation, with a world wine glut (Rabobank, 2004; Campbell and Guibert, 2006) and
continued increasing domestic production in New Zealand, together with too many new small
wineries, what was a slightly larger New Zealand wine enterprise to do? With a growing
recognition that export was the only possible opportunity for wine, similar to many other of
New Zealand’s primary products, the directors of Cottesbrook, a freshly created wine
producing enterprise developed a strategy to gain access to Tesco supermarkets in Britain.
How they did that and maintained that relationship is the story this case study reveals. How
that story was uncovered is described in the next section, which discusses the case study
methodology used, after a brief consideration of relevant theory. A little theory This issue of
the British Food Journal is focusing on relationships, networks and interactions in food and
agriculture business-to-business marketing and purchasing. Empirical case studies of
agribusiness chains were sought because there had been little empirical research reported
on such chains (Lindgren et al., 2006). Further, there has been little reported about the
extended supply chains servicing New Zealand agribusiness, although those supply chains
are some of the longest in the world and are vital for New Zealand’s continued economic
well-being (Patterson, 2005). Within an international agribusiness environment with falling
relative prices, free capital movements, increasing global competition and the ability to move
technology quickly from one area to another, ongoing value extraction depends on not only
continued innovation and good supply chain management, but excellence in the marketing
process (Gow, 2006). That value is obtained typically in one of three ways – by product
leadership, by operational excellence or by customer intimacy. Product leadership involves
processes such as research and development or brand promotion. Operational excellence
shows optimal processes and high efficiency leading to cheap prices and convenience,
whereas customer intimacy is an expression of understanding customer needs and finding
solutions especially fitted to an individual customer’s requirements. It has been suggested
that successful companies tend to excel in one of these value disciplines (Gow, 2006). Value
can also be created by exploiting performance gaps and opportunity gaps (Prahalad, 1993,
quoted in Gow et al., 2002). Supply chain management of agribusiness supply chains has
increased focus on filling the performance gaps. Performance gaps are typically addressed
by improved production and marketing systems and greater efficiencies, whereas
opportunity gaps involve seizing chances for growth from new business, new market
developments, or changes of strategic direction. Since 2000 some studies in the food and
agriculture industries have begun to explore the empirical details of relationship marketing.
In such relationship marketing a seller has had to develop a unique offer to meet a specific
customer need (Hingley and Lindgren, 2002). How managers have understood and reacted
to relationshipmarketing and how it fitted into the general marketing landscape, especially
marketing activities for building relationships, was an early focus of Hingley and Lindgren
(2002). Some of their case studies related to New Zealand wine businesses. The latter
expressed concerns not to become too dependent on a single market or a big retailer; but on
matching with similar sized importers of their wines and through reaching mutual trading
agreements (Hingley and Lindgren, 2002). New Zealand vineyards often required importers
to take only their wines of a specific type from New Zealand in an exclusive deal. A relational
approach was also facilitated by mutual trust and “... a good workable social context”
(Hingley and Lindgren, 2002, p. 816). While some winegrowers produced a standard range
of wines, others were attempting to customise their wines, such as label design for Tesco
(Hingley and Lindgren, 2002, p. 819). Communications were increasingly employed, whether
through international press coverage, newsletters, or their own web sites, or through
meetings between vineyard and importer at various levels (Hingley and Lindgren, 2002). In
contrast, Beverland and Lindgren (2004) looked at the evolving patterns of relationships over
time among New Zealand wineries, importers, retailers and customers. Their study of the
New Zealand wine industry is one of the few, which has attempted to track the evolutions of
relationships in a longitudinal manner. Further, they advocated replicating their research
across a broader range of industries over time, by longitudinal case studies of single firms
and an historical analysis of marketing practice within industries. This study unintentionally
replicates their research in some ways with another historical study of marketing and
relationships within a single firm and supply chain in the New Zealand wine industry.
Beverland and Lindgren found evidence supporting the position of Achrol and Etzel (2003)
that emphasized the value of relationships in growing markets and de-emphasized them in
stable markets. In growing markets firms did form relationships focused on short-term
problem based needs: ... in growth markets the need to form relationships may be more
paramount due to lack of such relationships, whilst in mature markets, firms may place less
emphasis on relationship goals, as they are searching for new opportunities (Beverland and
Lindgren, 2004, p. 852). Further they note that firms routinely create, build and leave
relationships in reaction to changing strategic needs and the business environment
(Beverland and Lindgren, 2004). They also found that their evidence supported the position
of Joshi and Campbell (2003) that firms who establish relationships early can achieve
substantial adaptation benefits by leveraging their mutual activities to the benefit of both
parties. In terms of managerial implications, they concluded that the strategic form that firms
take is a response to the complex nature of the context in which they find themselves. For
example: ... firms often gained significant advantages by forming and/or intensifying their
relationships early and, assuming continued investment in relationships (complemented by
constant market contact), these firms could enjoy increasing returns and create tacit
advantages that would be difficult for competitors to surmount. (Beverland and Lindgren,
2004, p. 853). Patterson (2005) has expanded the discourse by looking at the New Zealand
meat industry, which historically has depended on the same long supply chain to the UK. As
a large and dynamic industry, it has had players regularly entering and exiting it. Such
entrepreneurs tend to focus on a specific niche rather than compete with large and
established companies in the generic or commodity market place. They tailor their product
offering to what the market niche, which they have identified, demands. Patterson highlights
the role of channel coordinators in achieving the delivery of a consistent product offering
tailored to the requirements of the market niche, but found that despite its importance there
was very little research on the place and performance of this particular role. So he set out to
find out how meat industry supply chains were structured; why a particular structure was
used by a niche chain; and what was the role of the channel coordinator in such chains. In
his case studies he found all the supply chains studied had different structures, but that the
key to their structures was the role played by the channel coordinator, who brings all the
influencing factors together. They manage the chains to see that the requirements of the
target niche market are met and flow through to the consumers. So the product offering was
adapted to suit them. Channel coordinators also controlled “their” brand and the consistency
of the product marketed under it. In so doing they communicated with most or all of the
actors in the chain to retain their control and ensure full and regular information flows,
particularly to head off any problems at their outset, to provide feedback, and for fine tuning
the product offering. To motivate other actors in the chain, the channel coordinators used
incentives to ensure that what was required was done. Patterson highlights their focus: ...
the channel coordinator who targets a niche market will focus specifically on a market
segment, customizing his product to suit the demands of his target niche. In so doing, he
differentiates it from competing products and builds an in-depth understanding of that market
niche (Patterson, 2005, p. 170). The case studies showed that without the channel
coordinators there would have been no chains. They became channel coordinators because
they identified a potentially profitable market niche and set up the supply chain from nothing
to capture that (Paterson, 2005, p. 172). The possibility and value of contrasting supply
chains and channel coordinators marketing different products (e.g. fruit, vegetables, non
agricultural produce) to different niche markets was also identified (Paterson, 2005, p. 174).
The case study which follows was set up entirely independently of the research described in
the previous paragraphs. However, it provides a lot of further evidence supporting the
research described and corroborating much of that research. How it does so is reviewed in
the final parts of this article. This case study focuses on Cottesbrook, a New Zealand wine
enterprise, created primarily to take advantage of customer intimacy with Tesco.
Cottesbrook has also managed to capture significant value from innovation and supply chain
management. It grew out of Cellars of Marlborough, which in turn grew out of Cellars of
Canterbury. Originally Cellars of Canterbury was a cooperative wine company. It was set up
to reduce the performance gap in marketing by forming a cooperative company to achieve
economies of scale and reduced shared marketing expenses between five medium-sized
Canterbury wineries (Giesen Wine Estate, St Helena Wine Estate, Sherwood Estate Wines,
Rossendale Wines and Sandihurst Wines). Cellars of Marlborough was formed out of an
attempt to gain traction on an opportunity gap from expanding the field of operation from the
domestic New Zealand wine market to the world wine market in the late 1990s. For that to
happen, supplies of Sauvignon Blanc had to be secured. Hence the acquisition of vineyards
for Sauvignon Blanc supply, which became Cellars of Marlborough. However, over time the
cooperative structure could not stand the pressures of five entrepreneurs wanting to go in
different individual strategic directions. Management of those differences became too
inefficient and Cellars of Marlborough dissolved with each of the parties making substantial
capital gains from increasing Marlborough viticultural land values. From the ashes, like a
phoenix, arose a partnership between two of the members who formed Cottesbrook to seize
the opportunity gap of access to the international market place by specifically placing their
wines on the shelves of Tesco, the largest British supermarket chain (Davey, 2006), the
world’s most successful internet supermarket, and one of the most successful exponents of
customer relationship management (Humby et al., 2007) According to Stone (2005) Tesco
has forged much of its marketing success on its customer orientation. Part of that success is
built on “... finding suppliers who share your vision and can deliver what you want quickly
and cost effectively ...” (Stone, 2005, p. 2). This case study describes two unequal
companies fitting together well because they have similar marketing aims – keeping the
customer happy and loyal (Turner and Wilson, 2006; Rawstron, 2006). Methodology The
story of Cottesbrook’s developing relationship with Tesco is based primarily on semi-
structured interviews conducted with Cottesbrook’s key personnel and others. Person to
person interviews lasting one to two hours were conducted with Brent Rawstron and Robin
Mundy, Cottesbrook’s joint owners (brief biographies of each of the key actors in this case
study are given in the Appendix). These interviews were taped and other notes and
transcripts made of these interviews and other meetings which occurred. Various meetings
happened over the period 23 September 2003 to 12 January 2007. Graeme Thompson and
Dominique Vrigneau were interviewed by telephone with notes being made during the
interviews and immediately afterwards. There were no other informants available to provide
critical information. The case study is founded on long term knowledge of the New Zealand
and Canterbury wine industries. The author is the historian of the Canterbury wine industry
(Tipples, 2002). To maximize the reliability and content validity of the case study a strategy
of triangulation was used throughout for data testing, which involved cross checking different
information sources and methods to give coherent and supported results (Denzin, 1978;
Sale, 2003; Hill and Capper, 1999). To cope with the unreliability of the human memory,
multiple sources were used: previous experiences, observations, research notes, interview
notes and transcripts, world-wide-web materials, and documents as available (including
books, and academic and media articles). When an event was mentioned once, it was taken
as being a possibility of it having occurred; when mentioned twice it became a likelihood;
and when mentioned three times as a definite probability. The author had used this strategy
in previous histories dependent on a substantial element of oral history. Research ethics
were not problematic for this study. As a university researcher the author falls under the
exemption listed in Lyons (2005, Appendix 3, no. 1). The author’s own University Research
Ethics Committee does not require ethics clearance for academics working with other
professionals in their respective fields of activity. The nature of the project was outlined to
participants at the outset. No informant had to participate in this investigation and each was
advised of their chance to oversee the results before publication. The results of the study
embodied in this article were referred back to the key informants to avoid any
misunderstandings or misinterpretations, or anything which might be potentially damaging to
any actor in the supply chain. Those consulted were asked to provide written clearance of
the article. The author has no involvement in any of the businesses discussed. Sauvignon
Blanc – a wine with a difference Brent Rawstron, one of Cottesbrook’s two proprietors has
said: It’s a flavour profile which is quite unique in terms of freshness and “zinginess”, which
is there from naturally ripe grapes – the fresh flavours of the fruit (capsicum, asparagus,
gooseberries) ... Sauvignon Blanc is fruit driven ... It has a certain cleanness that European
blends never have (Rawstron, 2006). These characteristics seem to develop better in New
Zealand’s temperate climate and in Marlborough’s long hours of sunshine, with a large
diurnal temperature range, than other parts of the world. These characteristics which seem
to be in demand in the marketplaces of the UK and USA, particularly, are responsible for the
high per bottle prices received and are currently subject to intense scientific investigation
(Lund et al., 2007). The natural acidity of Sauvignon Blanc drops quite quickly with age so it
is not a wine to cellar. To retain those exciting fruit flavours it has to be drunk young, with
those fruit flavours being retained best by screw cap enclosures. (Brajkovich et al., 2005;
Nicolau et al., 2006). Winemakers have to keep these characteristics in the wine for
maximum commercial benefit. As it does not have to be “cellared” Sauvignon Blanc is also a
good wine for the winemaker’s cash flow and enterprise liquidity. Cottesbrook’s relationship
with Tesco supermarkets In the late 1990s Cellars of Marlborough, a commercial vehicle for
owning vineyards, which had grown out of Cellars of Canterbury (Gow et al., 2002),
recognised that New Zealand wines were going to be more difficult to sell. Problems were
also being encountered with overseas sales’ agents, although some sales were being
obtained in the UK. To cure this problem wines from Cellars of Marlborough could be re-
labelled, which permitted engaging another agent to help with marketing. This did not lead to
changing the wine. It still remained the same Marlborough Sauvignon Blanc but with a new
label. Attending wine shows and other commercial events was not helping sales by getting
past the gatekeepers of the larger volume purchasers such as supermarkets like Tesco.
Robin Mundy (2007) recalled: Brent had suggested he knew Graeme Thompson quite well
and Graeme had sold a lot of meat to Tesco ... to see if Graeme had some way of getting
hold of someone in Tescos, who would have the ability to get past the gatekeepers (Mundy,
2007). Graeme Thompson was approached and said he thought he knew one or two people
among the category managers, who he could ask who was the right person to approach.
Graeme was recruited as international sales agent by Cellars of Marlborough. He had been
concerned with innovative developments with New Zealand lamb and had placed the first
chilled packaged cuts in Tesco Supermarkets, which had become a major commercial
success. Category managers were important managers who were responsible for
implementing company policy in terms of Cottesbrook’s Sauvignon Blanc wine at Tesco 449
day-to-day decision making such as what to buy and stock; in how many stores; at what
prices; and in what volumes (Thompson, 2007a). These previous contacts led in two
directions: to Phil Reedman, the Tesco buyer for the Southern Hemisphere, who was based
in Australia and to Thierrys Wine Services of Romsey, Hants. Thierrys is a French owned
UK wine company that is responsible for much of Tesco’s wine acquisition. Thierrys’ Mission
statement says: Theirry’s are a source of real wine. We are a passionate team of people
providing real quality, an uncompromising attitude to sourcing honest wines, working with
exceptional producers. Thierry’s provide a real alternative to bland brands (Thierrys, 2007).
They did not have any New Zealand wine at that stage, but lots of French ones, their main
business. Initial samples were test marketed but with insignificant results. 2002 – short
Sauvignon Blanc supplies The year 2002 was a poor year and Sauvignon Blanc wines were
in short supply. Tesco were not getting as much New Zealand Sauvignon Blanc as they
wanted. It was being rationed. Tesco approached Thierrys and then Cellars of Marlborough
directly. Cellars did not have it, but wanted to sell other “surplus” wines to them too. Tesco
did not appreciate this style of operating. Two of the directors of Cellars of Marlborough
decided it was too good an opportunity to miss and got into further discussions with Tesco.
They set up the new label as the vehicle for this enterprise and gave their other directors a
short period to join the new enterprise or miss out. None did. Tesco, in the person of Phil
Reedman, came to New Zealand to see the enterprise. Relations with Phil Reedman of
Tesco and Dominique Vrigneau of Thierrys had begun haltingly. It took something like two
years before Tesco became sufficiently disenchanted: ... with the rationing treatment of
mainly Montana at the time that drove them to take our approaches more seriously and by
the time Phil Reedman made his initial visit to us he was well versed in what our quality was
(samples had been evaluated) and he was well aware of Alan McCorkindale’s involvement
as our winemaker; in fact that was a strong driving factor in convincing him that we could be
taken seriously. In other words by the time Phil arrived for his first visit he was already
completely prepared in terms of Tesco listing the product (Thompson, 2007b). Robin Mundy
takes up the story of his first visit: We [Robin and Brent] introduced ourselves as both being
family companies, not big companies ... (Mundy, 2007). Two or three different blends of
Sauvignon Blanc were tried. Phil asked what other wine was he expected to take as well to
secure the Sauvignon Blanc supply. However, he was re-assured: You only have to buy
what you want, if you don’t want it, you do not have to buy it (Mundy, 2007). A price at which
they were prepared to supply had been worked out equivalent to the bottom of the Montana
range, which was considered reasonable in light of the quality of the proposed wine, and the
required quantities were available. BFJ 110,4/5 450 The Cottesbrook label and wine style
One unexpected bonus for Phil Reedman was when he commented of one blend “I don’t
think this is dry enough”, to which Alan replied “We make the wine whatever way you want”.
Later Reedman and Vrigneau decided on the appropriate style, with the style a little sweet
for the first three months, and cutting the sweetness down in the subsequent nine months.
Not only was the wine made to order, but also everything that went with it: ... even the label
so that when it fitted on the shelf the name was at the top, not at the bottom so that people
read it ... everything was specially designed for the supermarket (Mundy, 2007). Various
proposals for a wine label were discussed. The new label eventually chosen for the venture
was Cottesbrook. It was the name of Graeme Thompson’s family home farm in Central
Otago, derived from the name of the original family home of the nineteenth century in
Northamptonshire. The original concept label with its requested gold lettering was delivered
to Phil Reedman within seven days of the initial meeting. Subsequently incremental
improvements to the distinctive label have been made five times. The stated objective of
Cottesbrook is to produce classic wines at competitive prices, reflecting the unique flavours
and aromas for which New Zealand wines have become famous (Thierrys, 2006). Reliable
supply One concern from Tesco was whether Cottesbrook could maintain a reliable supply
over the long term. Cottesbrook said they could agree to Tesco’s demands, and urged
Tesco to concentrate on selling their wine and they would concentrate on supplying it. “You
want x amount of that product – if you guarantee to take it, we will supply it” (Rawstron,
2006). They had to convince Tesco that they would give reliable supply over the long term. It
was critical (Thompson, 2007a). The reliability of the bottling line was one feature
contributing to this, with the change to screw cap closures maintaining both the quality of the
wine (no cork taint and consequent costly problems with returns) and the ability of screw
caps to be stored vertically without problems of deterioration). Since the introduction of
screw caps only one quality problem has arisen, when a customer decided to try his
corkscrew on his screw cap. Cottesbrook did not have the wine in that first year but took a
gamble as entrepreneurial winemakers that they would never be asked to supply the full
number of cases. Their reasoning was that with a new brand Tesco sales were only going to
start slowly. By the time that the new arrangement was beginning to happen it was
September and with the new vintage becoming available in the following June, the full
number of cases in the initial order would probably not be wanted. When the new season’s
wine is available, it has all those features of freshness and zinginess, which give
Marlborough Sauvignon Blanc its marketing niche. What vendor would want to be selling the
old year’s wine at that point? Rawstron and Mundy knew what Sauvignon Blanc was like – it
should be drunk young, therefore vintages are changed as soon as possible. Their
judgement was confirmed by events. The brand built slowly. Their demand predictions were
correct. A Win:Win deal had been achieved for both Cottesbrook and Tesco. Providing
further old season wine would have done nothing for further business The Cottesbrook
Marlborough-United Kingdom supply chain Marlborough Sauvignon Blanc is produced in
Marlborough on both Cottesbrook’s vineyards and on those of other contracted growers.
Typically it is turned into juice in Marlborough. The juice is settled for 24-28 hours, and then
racked off leaving the sediment. It is then taken either by road in truck and trailer units to
Christchurch, or by rail tankers. Which is chosen depends on relative economics. It then
goes through a short fermentation in stainless steel, whereupon batches are blended into the
winery’s particular formula, which was developed by wine making consultant Alan
McCorkindale in conjunction with Phil Reedman and Dominique Vrigneau, to help retain the
key defining characteristics for as much of the year as possible. By the end of May or
beginning of June, from a March harvest, the vintage is bottled in one of the few Tesco
approved bottling lines in New Zealand. It is then placed on pallets and into 40 foot
containers for shipping to the UK via Lyttelton or Port Chalmers. The containers do not have
to be environmentally controlled, despite going through the tropics. However, some
precautions are taken. Containers are bottom stowed and so not exposed to the full force of
the sun. Each container is lined with reflective silver building paper and a thermal blanket is
placed over the top of the cartons (Thompson, 2007). The containers are not individually
monitored. One shipment, which had got “lost” in Singapore for a period and “cooked” in the
heat, did result in a large insurance claim and re-routing the cargo so that the time in the
tropics was minimised. However that was an isolated event. Stock control The whole
success of the Cottesbrook venture is attributed by Robin Mundy to Graeme Thompson’s
keeping in touch with his customers. He only gets paid on his sales, so it is in his best
interest to keep them happy, which he does very well. Each week sales’ figures arrive and a
meeting is held. Projections are made of what they think Tesco will want and compared with
what they have ordered. On occasions Tesco have to be reminded if they have under
ordered, especially since deliveries from New Zealand take about thirty days. That must be
factored into their calculations. Only once has their product been off Tesco shelves in four
years. That occurred when a special event had been held. Tesco need a “Just-in-time”
supply. They do not want stock hanging around. Relationships One feature helping this
relationship to develop has been the regular meetings by the parties with their colleagues on
the other side of the world so that they keep in touch with what is happening and eliminate
any problems before they become real issues. Cottesbrook have been quite proactive on
this front. At the professional level all of Brent Rawstron, Robin Mundy, Graeme Thompson,
Phil Reedman and Dominique Vrigneau regularly visit each other. Brent, Robin and Graeme
also visit the UK. regularly, at least once a year, sometimes more. They always visit the local
Tesco store BFJ 110,4/5 452 in the area they are visiting and make themselves known to the
wine section’s staff, both management and shelf stackers, something they believe does not
happen with other New Zealand suppliers. They introduce themselves as owners of the
business. “What we are doing is putting a face on the product. I think that is the big thing
about it.” At Tesco Calais, a particularly big outlet, they make a point of taking New Zealand
calendars, especially near Christmas, and distribute them widely. “It’s the sheer fact that you
have seen them, said hello” (Mundy, 2007). One particular example from Macclesfield was
recalled where the same store was visited three years later and the stacker remembered
Robin Mundy, “the man from Cottesbrook”. Another New Zealand label had been short of
stock and the stacker had made up for it by increasing the number of facings for Cottesbrook
from two to three facilitating the sale of more stock and increased size of orders. He had
done that because they were real people who had visited and made themselves known.
Since the first Cottesbrook wines had appeared on Tesco shelves, they estimate they have
visited some 80 Tesco stores (Mundy, 2007). Driven by the market The success of the
bottled Sauvignon Blanc led to a further business. Tesco asked for a Pinot Noir. Sales
started quite slowly, but that has now grown to quite a reasonable market. In matching
bottles there is now a white and a red at a £1 difference. At one meeting Reedman was
asked: “Is there something that you would like on your shelf, Phil, that we can do that no one
else can do? Phil responded “Yes, there is. We would like to have a 3 litre wine cask”
(Mundy, 2007). Despite previous requests made to bigger companies nobody had been able
to supply a satisfactory product in A1 condition in the UK. Cartons had proved too flimsy,
losing their shape on the journey between New Zealand and the UK. This performance gap
was a challenge to two innovative New Zealand farmers. They recollected a couple of points
from a European visit. When visiting a bottling plant near Marseilles, Les Chais Beaucarois,
they had observed casks being filled. Then they had seen trucks of wine going under the
Channel in the Tunnel and never having to go by sea at all. The random question had
thrown up a real possibility. Discussion with Thierrys revealed that they already had
extensive dealings with Les Chais Beaucarois for their French imports. A proposal was put
to Tesco based on shipping bulk wine to Marseilles for re-packaging. Such exports from New
Zealand occupied container space far more effectively and thus were not only more
economic but far more energy efficient in terms of food miles than other Antipodean
suppliers (Saunders et al., 2006). The bulk wine is shipped to Marseilles in 20-foot
containers with an internal 24,000 litre bladder. Marseilles is the port close to Les Chais
Beaucarois, the business chosen by Thierrys for the re-packaging of the bulk wine into 3 litre
customised Tesco’s Bag-in-Box (BiB) cartons. Tesco wanted to be the first company to
launch a Sauvignon Blanc in a 3 litre Bag-in-Box (BiB), before their supermarket rivals did.
Cottesbrook asked for a premium price because it was a premium product, and because
they were going to be attacked by the rest of the New Zealand industry for doing it. It
became the most highly priced BiB ever sold by Tesco and was £4 more expensive than the
next most expensive BiB wine. The economics of the BiBs are also very good. A BiB
contains 24 standard glasses of wine. If they were sold for £4 each the total would be £96 for
an outlay of just £21.99. When Tesco had wanted a bigger margin, they had put up the price
by £2.00 to £21.99, rather than ask Cottesbrook to cut their margins. Cottesbrook’s
Sauvignon Blanc wine at Tesco 453 This equated to approximately £1 per drink, making the
calculation of income from sale of the drinks particularly easy for the hospitality industry. BiB
wines have a number of marketing advantages. First, they are a in a container which
prevents oxidation. When opened there is no wine exposed to air as in a part used bottle of
wine. The vacuum packed bag collapses as the wine is released and no air is allowed to
enter the bag. Second, they take less space than bottles containing a similar quantity. Third,
they incur very few rubbish removal costs compared to glass waste. Fourth, the lower space
requirements also have important retail advantages. For a “house” Sauvignon Blanc, the 3
litre BiB takes up a minimal amount of space for the volume of wine, and sits particularly well
in the refrigerator. Furthermore, it has been suggested that many cafe´s and restaurants
have taken to buying the BiB. If many cafe´s and restaurants are buying, that would explain
why Tuesday is the biggest sales’ day, because many hospitality venues are shut on a
Monday after the weekend, re-opening and re-stocking on a Tuesday. With limited storage
space in urban sites ready access to a Tesco supermarket could easily reduce the potential
stock storage problem of too many bottles. There is also the advantage that the content of
BiBs is not of a specified vintage. Therefore at the end of one season’s production run the
winemaker can mix the new wine, with its extreme varietal characteristics with that from the
end of the old year, and make the transition to the new year’s wine much more gradual and
correspondingly less noticeable (Rawstron, 2006). In Rawstron’s opinion the product has
been marketed very well by Tesco. One feature most Kiwi commentators did not realise was
that BiBs are shelved alongside bottles of vintage wines, unlike in New Zealand, where they
tend to be relegated to a discount/cheap part of the shelving. The public controversy
expected did arise because “Brand Marlborough” was perceived as being undermined and
diatribes against the “evils” of BiBs and the traitorous behaviour of Rawstron and Mundy
were published. For example, “Of sweet young sauvignon and bitter chateau cardboard” in
which one reads: One company makes a fast buck while every producer of Marlborough
Sauvignon blanc loses a few cents on every bottle for ever more. Brand “Marlborough
Sauvignon Blanc” must suffer a loss of status with this product being sold by the cask ... The
cowboy factor is no longer a danger; it is a reality (Campbell, 2003, p. 16). The Listener took
a more sober view: Marlborough is up in arms over some wine company daring to
compromise the quality aspirations of the region’s winegrowers by shipping bag-in-box
Marlborough sauvignon blanc to a UK supermarket chain ... ... So why all this fuss about
bag-in-box sauvignon blanc in a British supermarket noted for the low price of its generic
wines? Is there a dash of guilty conscience out there among winemakers whose favourite
marketing technique is to flog container loads of Marlborough sauvignon blanc to any
supermarket chain that will take them? Currently, the New Zealand wine industry’s
international marketing effort sounds far too similar to that of the meat industry in the 70s for
anybody to be fooled into thinking they are actually interested in the premium wine trade
(Stewart, 2003, p. 44). The controversy was not news in Britain, where, as Phil Reedman
explained on behalf of Tesco at the 2004 Pinot Noir Conference, there was a more
favourable perception of cask wine and it was then selling at £20 or $54 for four bottles
(Hutching, 2004). BFJ 110,4/5 454 Reedman did not believe it would lower the high profile of
Marlborough’s flagship brand: Brands and strong reputations are important to Tesco and we
seek to build brands not destroy them. Growth in wine sales from the New World countries is
strongly correlated with strong brands and therefore doing something which undermines a
key brand is not something we would do ... Clearly customers recognise the quality and
value for money offer of this package along with its convenience (Wilson, 2004). While it had
received mixed reviews from wine writers, it was well accepted by customers: Great for
parties. 3L of very nice wine. We bought this for a party we had at our home. The guests
really enjoyed it (Tilby). Wine on tap – fab! My current favourite wine is Sauvignon Blanc
from New Zealand so it’s great to be able to get my hands on a 3L box (Hermione)
(Lovedthatwine, 2006). Nothing is heard now about the supposed problem, with the ready
availability of Sauvignon Blanc for any bulk purchase. Yet Cottesbrook continue to send BiBs
and Tesco are very happy customers. The future Cottesbrook have attained a preferred
supplier status with Tesco. Their relationship has grown and subsequently they have been
approached to supply Pinot Noir and then other wines, including the BiB Sauvignon Blanc
from New Zealand. Tesco perceived Cottesbrook as being very loyal to them through the
public dispute of introducing Sauvignon Blanc in a BiB. In return they have stuck by
Cottesbrook and increased their mutual business. In Brett Rawstron’s opinion, as an
effective channel coordinator, it is all about building and maintaining a relationship, and
paying attention to what the customer wants and then supplying exactly that. The only
downside to this relationship is that they are now identified as Tesco suppliers and cannot
supply anybody else without undermining that special relationship. As entrepreneurs they
have gained value from filling both performance gaps (BiBs) and opportunity gaps (getting
preferred supplier status with Tesco for their very competitive bottled Cottesbrook wines).
Both of those achievements have been built on the underlying strategy of establishing an
intimate relationship with Tesco and especially with their staff and associates, but above all
in meeting every customer requirement. Implications Five main implications are provided by
this case study. First, it remains a key priority in any business to provide exactly what the
customer wants. This supports the same point made previously by Patterson (2005). The
wine is made to meet Tesco needs. It is then labelled and packaged to suit their particular
supermarket requirements, which corroborates Hingley and Lindgren’s (2002) observation.
Second, Cottesbrook have carefully monitored the state of supply of their wines and Tesco’s
anticipated demands, Cottesbrook’s Sauvignon Blanc wine at Tesco 455 so that the shelves
are always filled and their wine is continually in front of the public, reinforcing the point made
by Patterson (2005). Third, they have shown exemplary attention to detail, right down the
chain, even to those responsible for displaying and selling their wines. People and
relationships matter to them and as a result they have received good treatment. Fourth, they
seized their opportunity to gain access to Tesco, taking a commercial risk in doing so, but
they are now benefiting both from increasing sales and requests for new products. This point
further supports Joshi and Campbell (2003) and Beverland and Lindgren (2004) about the
value of early market entry and the chance to leverage of those initial efforts. Finally,
Paterson’s research on the role of chain coordinators seems to be largely confirmed for the
wine sector, as exemplified by Cottesbrook. It should be noted that the chain coordinator’s
role appears to have been taken by Brent Rawstron and Robin Mundy, with Graeme
Thompson in support. Both Rawstron and Thompson had extensive meat industry
experience prior to Cottesbrook, which may have influenced their approach, but the owners
formed Cottesbrook to take advantage of this opportunity gap of gaining access to Tesco
and have been successful in doing so.